CYIL 2015

DIAG HUMAN: A CASE STUDY ON MULTIǧJURISDICTIONAL ENFORCEMENT… to prevent a party from seeking enforcement in another New York Convention jurisdiction and thus effectively adding a further category to the exhaustive list of grounds for resisting enforcement. 37 This could not only discourage award creditors seeking enforcement of the arbitral award in England but also undermine the principle of enforceability of international arbitral awards being the cornerstone of the arbitration as the preferred method of resolving international disputes. As the decision was not appealed, it remains to be seen whether this approach will be upheld in future cases. Enforcement resisted due to the absence of a commercial relationship Three months after the English High Court rendered its judgment and while the review process of the Award in the Czech Republic was heading towards an end, the enforcement of the Award was resisted in the United States, albeit on a different ground. On 14 August 2014 (interestingly at that time the Review Award was just delivered staying the whole arbitration proceedings) the US District Court for the District of Columbia 38 dismissed the case for lack of subject matter jurisdiction. The US court declined jurisdiction, holding that the parties to the Award did not have a commercial relationship, thus not satisfying the New York Convention’s requirement that the dispute must arise out of a legal relationship that is considered commercial. 39 The U.S. Federal Arbitration Act (FAA) codifies the New York Convention into US law. 40 It has to be noted that the US made a so-called commercial reservation to the New York Convention limiting its application to awards relating to matters (contractual or not) considered commercial under the national law. For the FAA to apply to the case the court applied a four-part test: (a) there is a written agreement, (b) the writing provides for arbitration in the territory of a signatory of the New York Convention, (c) the subject matter is commercial and (d) the subject matter is not entirely domestic in scope. 41 The court did not consider a claim arising out of a defamatory letter from a Czech state official to the claimant’s business partner a commercial matter in the sense of the New York Convention. The judge admitted that the alleged interference had commercial consequences for Diag Human and the arbitration tribunal awarded damages to address commercial losses; however, Diag Human had no “legal relationship of commercial subject matter” with the Czech Republic (a contract, an agreement or transaction). 42 The court concluded that “it is the nature of the relationship between the parties and not the nature of

37 Supra note 36. 38 Diag Human S.E. v. Czech Republic-Ministry of Health, No. 13-0355 (ABJ) (D.D.C. 14 August 2014).

39 Supra note 38, p. 8. 40 Supra note 38, p. 6. 41 Supra note 38, p. 7. 42 Supra note 38, p. 8.

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